DOL Unhappy over Enron's Fiduciary Deal
Flip-Flop

April 4, 2002 (PLANSPONSOR.com) - US Department of
Labor (DoL) officials have made it clear that they're
"exceptionally unhappy" with Enron's move to back out of an
agreement that makes State Street Bank and Trust the
independent fiduciary for Enron's pension plans.

“I called Enron’s general counsel at 9 am (Wednesday)
and made it crystal clear ? that we expect them to abide by
the agreement they signed, and if I were in Enron’s shoes,
this isn’t the way I’d be dealing with the government right
now,” Labor Solicitor Eugene Scalia told The New York
Times. “The representations made by Enron’s attorneys
in federal court (Tuesday) were a contradiction and
repudiation of the agreement Enron signed with the federal
government.”

Among other things, DoL officials say Enron’s abrupt
turnaround will delay transferring the pension plans and
their assets into independent hands.

Enron Fights a ‘Tax’

This week, Enron lawyers complained to a US Bankruptcy
judge that forcing the once giant Houston energy trader to
pick up the tab for State Street’s efforts amounted to an
unfair “tax”.

Under the agreement announced March 14, Enron was to pay
a maximum of $1.5 million annually plus expenses for State
Street’s activities in running Enron’s three retirement
plans.

The three retirement plans have combined assets of more
than $2 billion, according to government and company
officials.

Also Wednesday, Daniel Weiss, the spokesman for
Representative George Miller (D – California), the senior
Democrat on the House Committee on Education and the
Workforce, accused Enron of “hoodwinking” the government
and urged the DoL to take action.

“The same pension administrators are in place who
were there during the downfall of Enron, when they said not
one word to employees in the retirement plan about the
declining financial condition of Enron,” he said.

Miller is one of a number of lawmakers who is sponsoring
pension reform legislation in the wake of the Enron debacle
(see more on
Miller’s proposal
).

Conflicts of Interest

In a second developing Enron matter this week, the
Securities and Exchange Commission (SEC) said that it would
ask US Bankruptcy Judge Arthur Gonzalez, who is hearing the
Enron bankruptcy case, to appoint an independent examiner
with expanded powers.

The independent examiner would investigate Enron’s
collapse and potential conflicts of interest in the
bankruptcy case, according to the Times.

The SEC said that it was supporting a move by a group of
creditors, including various pension and retirement funds,
because of widespread accusations of conflicts of interest
involving companies with longstanding ties to Enron.

According to the Times report, those with possible
conflicts are Wall Street banks Citigroup, Credit Suisse
First Boston, and JP Morgan Chase.

“We support the appointment of an examiner because an
independent person with no relation to the transactions
could investigate and report back to the court on whether
there is money available to pay investors and other estate
creditors,” said Alistaire Bambach, an SEC enforcement
official.